Tuesday, September 20, 2022 / by Justin Critchfield & Michelle Aspseter
Real Estate Stats and How They Influence the Narrative
When it comes to purchasing a home, we’re all on the lookout for the perfect property that fits our budget. House hunting is accompanied by a constant follow-up of news, Utah housing stats or Utah Bubble that would revolve around the real estate market so that we’re in a position to know when the market conditions are favorable enough for us to swoop in and pick the best property. But let’s be honest - we’re bombarded with a crazy amount of information from different sources (realtors and lenders), so as laymen, it can all get a bit confusing.
Amidst all this chaos, it gets difficult for you to understand whether or not the market is in the right position for you to invest in real estate. So if you too are in a confused state of mind, this post is just for you - we’ll be telling you everything you need to know about the real estate terminology so that you can make an informed, educated investment decision:
Different Types of Stats
New Housing Stats
This indicates the permit that a builder acquires to start a new project in any particular city. These Utah housing stats are measured and counted according to different aspects, such as the fluctuating prices of raw materials like concrete, lumber, etc.
Existing Home Sale Stats
These indicate the number of homes sold currently - the percentage depends on the prices of the homes listed for sale in the market. So if the prices are exorbitantly high, the existing home sale stats will immediately plummet. Another aspect that negatively influences the existing home sales are interest rates.
Currently, mortgage applications are down by 18.5% - what does that mean? It indicates that the housing market is contracting at a faster pace. Mortgage applications, too, are impacted by high interest rates, simply because higher interest rates make mortgages unaffordable for most people.
These are the stats that realtors use to influence buying decisions of buyers - and it is one of the biggest pet peeves of buyers out there. The year-of-year housing stats indicate the comparative rates of homes - so if a realtor tells you that the price of a particular property as of July (the current year) is lesser than that of last July, they aren’t really taking into consideration the price fluctuations between, say, the period from April to July - where the prices may have witnessed a significant decrease.
During this period, the prices may have decreased another 10%, (which makes the total of 20% decrease) - but the realtors do not factor in these price decreases (or increases, as they may be). And this is precisely why buyers don’t have an accurate depiction of what is happening in the real estate market.
Accuracy of Year-on-Year Statistics
Year-on-Year stats are an important aspect that may influence your buying decisions. So, we’re here to give you the real data - accurate facts on which you can choose whether or not you wish to invest in a particular property. Let’s talk 2022 - the prices of properties peaked in April 2022, and went down 5-10% . Of course, these prices are considering the locality of the property. The state of Utah witnessed a decrease of 5-10%, but the same may not be the trend in another state.
For example, we came across this condo that was for 170, and then dropped to 150 - and we went in and pitched 125, and guess what - it got accepted! And this right here, is a perfect example of year-over-year statistics. In case we’re talking about year-over-year statistics where the prices have shown a consistent increase, the accuracy of those stats is usually on point.
Things you Need to Keep in Mind
What you need to do is look at the statistics ranging from April and May of this year to the present month. Reversing statistics can help you understand price trends better. You would also be in a position to correlate the year-on-year stats with other aspects that we mentioned, namely the existing home sales and mortgage application rates.
As buyers, it is advisable to study these and understand their definitions to know exactly what they mean. Look for real-time data and not some facts that are two-months old. If you’re wondering how you can figure your way through these complex numbers and terminology - we’re right here to help you get through it! Stay tuned to find out more - so that you make a better, informed real estate investment decision.